A Lexington developer is proposing to build a pedestrian tunnel underneath railroad tracks to connect a proposed housing development to the University of Kentucky.
Dennis Anderson, president of Anderson Communities, who has several apartments in the area between South Broadway and South Limestone, is starting construction on a 40-unit apartment complex on Simpson Avenue.
Anderson wants to use tax-increment financing to pay for most of the cost of the tunnel. Tax-increment financing uses new taxes generated from a development to pay for infrastructure costs. In this case, new taxes are projected to pay for $2.17 million of the $2.2 million price tag for building the underground tunnel.
"It's the right thing to do," Anderson said. "It's a public safety issue. We have had three students who have been killed on those railroad tracks in that area."
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Tax-increment financing, or TIF, districts have been approved in other areas of the city, but Anderson is the first developer to ask other government taxing units — Lextran and the Lexington Public Library — to participate in the TIF. Only the city and the state have pledged to use new taxes generated from proposed developments to pay for infrastructure improvements.
Anderson also is the first developer to propose using tax-increment financing to build a tunnel.
The Lextran board is scheduled to discuss Anderson's request at its meeting in April, said Jeff Fugate, chairman of the Lextran board.
Anderson said he plans to approach the library board next. The Urban County Council would be the last to vote on the proposal.
The city is aware of Anderson's plans.
Anderson has discussed his proposal with the city but has not submitted a formal application , said Kevin Atkins, the city's chief development officer.
"This is still in the very early stages," Atkins said. "There is currently no application pending, no public hearing requested, etc."
Anderson originally proposed building a pedestrian bridge over the railroad tracks, but that proved to be too costly. There is an electrical substation in the area and high-voltage electrical lines. Just to move those lines would cost more than $1.5 million, he said.
That's when Anderson and his engineers began exploring a tunnel under the railroad tracks. The proposed tunnel would be close to Simpson Avenue.
"We will make it safe," Anderson said. "It will be like the tunnel that currently connects the two courthouses or the tunnel you take at the airport that connects two terminals."
To get access to the tunnel, people will need swipe cards and have to pass criminal background checks.
"We will be working with the police to make sure that it's safe," Anderson said. "We don't want to cure one unsafe situation and create another."
According to the Federal Railroad Administration Office of Safety Analysis, 15 people have been killed on Fayette County railroad tracks from January 2000 to December 2014.
According to economic projections Anderson included in a Feb. 12 letter to the Lextran board, Lextran would receive $32,383 in new property taxes in the first year that the apartment complex is open. Of that $32,383, only $13,242 would be committed to paying off the cost of the tunnel. Lextran would receive $19,141. The city's portion that could be used to pay off the tunnel would be $42,837. The library's portion would be $11,035 in the first year, according to the letter.
Anderson cautioned in his letter to the Lextran board that the area also would need stormwater improvements estimated to cost $1.72 million. That's in addition to the $2.2 million for the tunnel. If the city, the library and Lextran agree to participate in the TIF district, those taxes would pay for $2.17 million of that, the letter says.
As a private developer, Anderson said, he cannot afford to pay for the tunnel.
"We have been working on this for more than a year and a half," Anderson said. "It will likely take us another year and a half to get everyone on the same page. I think it's the right thing to do for safety reasons. But sometimes the right thing to do is not always the easiest thing to do."